Big tech stocks lost 1, 360 trillion won in market capitalization

U.S. top five tech companies (Apple, Microsoft, Google, Amazon, and Meta) lost 1,360 trillion Korean won in market capitalization over the past five days. They are faced with so-called the "black week," in which their third-quarter earnings shock led to plummeting stock values. The global slowdown in consumption and reduced corporate investments are considered to have brought down the share prices of those tech giants sensitive to economic fluctuations.

On Thursday local time, the shares of Amazon, one of the world's biggest e-commerce firms, dropped by almost 13% in after-hours trading immediately after its report of the third-quarter earnings of the year, following sharp plunges in share values of Alphabet, Meta, and Microsoft. The stock value crash is triggered by less-than-expected third-quarter earnings plus warnings of an economic growth slowdown in the fourth quarter, which is supposed to be the peak season for consumption.

Meta, the operator of Facebook and Instagram, witnessed its shares nosedive by 25% in just one day. Along with the worsening online advertisement market, one of its crucial profit sources, investor doubts are growing over the metaverse business. It is analyzed that those factors likely have contributed to the value drop. Alphabet, Google's mother company, also saw its share price drop by nearly 8% during the week as its third-quarter YouTube ads profits have declined by 2% year-on-year. Reduced demands hit Microsoft in PCs, and even Apple recorded 42.6 billion U.S. dollars (approximately 61 trillion won) for the third-quarter iPhone sales, lower than the market expectation of 42.7 billion dollars.

As a result, the total market capitalization of the U.S. top five tech companies has decreased by 13.2%, or 954 billion dollars, from 7.204 trillion dollars on Monday to 6.25 trillion dollars on Thursday. The asset value of Amazon founder Jeff Bezos also shrank by 23 billion dollars.

Those five big tech companies operating globally serve as a global economic barometer. Consumers worldwide are no longer spending due to high inflation and high-interest rates, while companies started cutting their budgets for online advertisements. The factors in tandem drove the earnings shock this week.

Experts analyze that companies are assessed based on swift restructuring instead of future growth potentials amid growing concerns over a global economic recession. Bloomberg reported that plans for cost reduction have become more critical than ambitious future growth.

Amazon CFO Brian Olsavsky said in a conference call on Thursday that they are tightening their belt, including pausing hiring in certain businesses and winding down products and services where they believe their resources are better spent elsewhere.


Hyoun-Soo Kim kimhs@donga.com